HC Deb 13 May 1985 vol 79 cc1143-4
7. Mr. Pike

asked the Chancellor of the Exchequer if he will estimate what increase would be required in the top rate of income tax to yield the same income to the Treasury as would be lost if the first £1,000 of taxable income were to be taxed at 15 per cent. instead of 30 per cent.

The Financial Secretary to the Treasury (Mr. John Moore)

To finance the £3.3 billion needed for such a lower rate tax band would require a confiscatory rate, of 100 per cent. for all taxable income over £20,000, on the theoretical assumption that there would be any such income to tax.

Mr. Pike

Despite that reply, does the hon. Gentleman agree that it would be more equitable to assist those paying the lower rate of taxation, to shift the burden on to those who have more ability to pay? Does he further agree that the present taxation system is inequitable, bearing in mind that the first act of the Conservatives on taking power in 1979 was to reduce the top rate of tax from 83 to 60 per cent.?

Mr. Moore

If, instead of making absurd suggestions, the hon. Gentleman examines what has already been done in the Budget, he will see that, as opposed to his peculiar proposal, which would benefit—if it were able to be put into practice—a married couple with earnings of £85 a week by £2.88, the Budget measures, on NIC and taxation alone, without his absurd conditions, have advantaged the same family by £3.43 a week.

Mr. Stern

Does my hon. Friend recall that the top rate of tax under the last Labour Government, at 98 per cent., was equalled in the world only by the Republic of Togo? Does he agree that, admirable though that country's social system may be, it is not necessarily appropriate for this country, particularly as the Labour party has threatened to reintroduce that top rate of taxation?

Mr. Moore

It would be inappropriate for me to comment on the Republic of Togo. However, it is appropriate for me to comment on the absurdity of the taxation nostrums of Opposition Members.

Mr. Tim Smith

Does not my hon. Friend's answer to this ill-informed and naive question show beyond doubt that the Labour party's principal concern is not redistribution but confiscation?

Mr. Moore

My hon. Friend is right. It is not only confiscation but a complete inability to understand what actually benefits those who are at the bottom of the scale.